What changed
The previous circular (MPD.BC.298/07.01.279/2007-08 dated April 25, 2008) had set the interest rate ceiling on pre-shipment rupee export credit up to 180 days and post-shipment rupee export credit up to 90 days at BPLR minus 2.5%, valid until October 31, 2008. This circular extends that validity period to April 30, 2009, with the same ceiling rates.
What it means for you
Banks must continue to offer rupee export credit at rates not exceeding BPLR minus 2.5% for the specified tenors until end-April 2009. This provides stability for exporters and ensures credit remains affordable. Banks can still charge below the ceiling, so competition may keep rates lower.
What you must do
- Update internal systems to reflect the extended validity of the interest rate ceiling on rupee export credit up to April 30, 2009.
- Communicate the extension to relevant branches and export credit teams to ensure compliance.
- Monitor BPLR movements to ensure export credit rates remain within the ceiling of BPLR minus 2.5%.
- Acknowledge receipt of the circular as instructed by RBI.
Who it affects
All scheduled commercial banks offering rupee export credit, Exporters availing pre-shipment and post-shipment rupee credit, Bank treasury and credit policy teams
What is the interest rate ceiling for rupee export credit under this circular?
The ceiling is BPLR minus 2.5 percentage points for pre-shipment credit up to 180 days and post-shipment credit up to 90 days. Banks can charge any rate below this ceiling.
How long is this dispensation valid?
The extended validity is from November 1, 2008, up to April 30, 2009. The earlier validity ended on October 31, 2008.
Are there any changes to interest rates for tenors beyond the specified periods?
No. Interest rates for tenors beyond the prescribed limits (over 180 days for pre-shipment and over 90 days for post-shipment) remain free from any ceiling.